Atlanta Financial Blog

The Financial Action Checklist

The Financial Action Checklist

Charles Crowley, CFP®, AIF®
September 29, 2020

From radio to TV to social media, the how-to lists on managing money and building wealth are a gracious plenty. Some are good and some are less so. Our FIT™ Perspectives Podcast team recently began to work through some of the most notable of these resources to consider how we would re-prioritize the “steps” and further expand upon some very over-simplified guidance. The outcome is the “Financial Action Checklist” (FAC) and it is designed for those who not only desire financial stability but seek pure financial independence.

  1. Put yourself on a budget and take responsibility for where you are.

Budgeting is arguably the disciplinary cornerstone to building wealth; the undeniable fact is that you cannot take command of your money until you know where it has been going. Take inventory of where you are, set your financial goals, track your spending, and set your budget to eliminate unnecessary expenses and build margin into your life. 1

  1. Set aside your “Contingency Fund.”

Cover your deductibles in cash first. Homeowner’s, auto, and health insurance deductibles – properly bank these figures aside for the worst-case scenario. For those who really want to get radical, set aside an extra sinking fund of sorts ready to cover the unexpected minor predicament.2

  1. Take advantage of any company matching on your retirement plan.

Contribute to your company retirement plan at least what you must to ensure you don’t miss out on the company matching provisions.

  1. Build your “Emergency Funds.”

With steps 1-3 in hand, start working toward building a cash cushion that will cover your family in the event of a more prolonged interruption in income (sudden job loss, an illness not covered by applicable insurance, etc.). A good rule of thumb is to save 3 to 6 months of expenses depending on the number of income sources you have coming in.

  1. Be aggressive with consumer debt payoff.

These balances are highly punitive to run up and then subsequently pay off. Aggressively attack these balances with a strategy that you can stick to.3

  1. Prioritize retirement savings opportunities.

Once the consumer debt has been eliminated and there is additional capacity within your budget, factor in an increase to your retirement savings. Challenge yourself to get to the 15-20% mark, and further evaluate whether it makes sense to begin including a Roth IRA/401(k) contribution in the mix.

  1. Debt prioritization for larger, less punitive debts.

Due to the lower, fixed interest rates typically associated with these types of notes, these obligations are going to fall lower in priority structure than saving/investing. The theory is that you will earn more by investing the money than these notes cost you in interest. As orders go, student loans first, then auto, then mortgages… but rates will ultimately determine the priority.

  1. Challenge your savings goals.

At this stage of the checklist, continuing to challenge your savings capability is what will take you to the next level. Saving 25-30% of pay would be extraordinarily good, putting you in a rare category of people both now and later! Further diversifying your portfolio “tax buckets” is also wise – in retirement, you want some pre-tax retirement money, some Roth (or after-tax) retirement money, and some non-retirement/taxable money. By doing this in your working years, you set the stage for structuring a very tax efficient retirement income plan in the future.

  1. Create a giving plan and give back.

Giving back doesn’t have to always involve money. Think TIME, TALENT, and TREASURE. What you do give monetarily may help you from a tax standpoint, so there should be a strategy behind it. That being said, your time and unique skills carry value as well and give you flexibility for your charitable intentions.

  1. Enjoy your success pre- and post-retirement.

Many people forget to enjoy the fruits of their hard work. Before retiring, while still building up your retirement war chest, there is nothing to say that you can’t enjoy vacations, buy new things, renovate your home, etc. Just plan for these things appropriately. In retirement, it is a mentality shift. The spicket filling up the bucket has been turned off and sometimes it is difficult to give yourself permission to enjoy what you worked hard for. It is ok but, as with all things, just do it with discipline and within the constraints of a plan.

In conclusion, we hope the FAC above is a powerful tool to help you move forward growing your wealth. As you assess your current progress, check out the most recent episode of the FIT™ Perspectives podcast where Harrison Fant and I further elaborate on each step of the FAC. Lastly, keep in mind our second opinion review service as well –  a complementary resource designed to leverage the expertise of our team and help you determine what the next financial decision is for your situation.



1 Here is a great series from the FIT™ Perspectives Podcast team on budgeting basics:

Budgeting Basics Part 1: The 6 Letter Swear
Budgeting Basics Part 2: There’s an App For That
Budgeting Basics Part 3: Budgeteering

2 Dubbed our “Murphy money”, my family has elected to always have set aside an extra $500 to $1k of cash ready to cover non-emergent inconveniences. We worked this goal into our budget and built it up over time.

3 Whether you use the debt snowball or avalanche approach (balances small to large OR interest rates highest to lowest), commit to the strategy! Build your budget completely around it until done. I personally look at both balances and interest rates when prioritizing for clients- a few small, easy wins won’t hurt the strategy to get started, but you have to look at how much the highest interest rates will cost you over time.

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